Deutsche Konsum REIT-AG with solid business development in the first half of the financial year 2022/2023

PRESS RELEASE

Deutsche Konsum REIT-AG with solid business development in the first half of the financial year 2022/2023

• Rental income increased by 6.8% to EUR 38.7 million
• Net rental income up by 7.3% to EUR 26.5 million
• FFO down 5.8% to EUR 19.9 million / FFO per share at EUR 0.57
• Annualised rental growth of 3.4% (like-for-like)
• Property portfolio comprises 184 properties and is valued at EUR 1.11 billion / Annual rent at EUR 78 million
• EPRA NTA per share at EUR 11.27
• Refinancing of short-term maturing loans carried out
• Net LTV amounts to 51.6%
• Scope rating confirmed for secured and unsecured debt (investment grade)

Potsdam, 12 May 2023 - Deutsche Konsum REIT-AG (ISIN DE000A14KRD3) has recorded solid business development in the first half of the current financial year 2022/2023.
 

Rental income and net rental income increased
The Company's rental income increased by 6.8% from EUR 36.2 million to EUR 38.7 million in the first half of the 2022/2023 financial year compared to the same period of the previous year due to a larger property portfolio. The net rental income also rose slightly over proportionally from EUR 24.7 million to EUR 26.5 million.

Funds from operations ("FFO"), on the other hand, declined by 5.8% and amounted to EUR 19.9 million or EUR 0.57 per share (H1 2021/2022: EUR 21.1 million or EUR 0.60 per share). This is primarily the result of increased interest expenses due to the rise in interest rates for some of the debt instruments that are subject to variable interest rates, as well as new financings at the current interest rate level. In addition, aFFO (FFO after deduction of capitalised modernisation measures) fell by 41.7% to EUR 8.6 million due to a higher investment volume for revitalisation measures at three properties. The revitalisation measures have now been largely completed and will subsequently lead to significantly higher rental income at the respective properties.

Further rent growth due to indexation clauses
Currently, more than 85% of the rental income of DKR's real estate portfolio is inflation-hedged, as a large part of the leases contains corresponding indexation agreements. This led to annualised rental growth of 3.4% (like-for-like) in the first half of the financial year. DKR expects further rent increases from indexations in the coming quarters as well, as long as the inflation level remains high.
 

Balance sheet value of the real estate portfolio at over EUR 1.1 billion with annual rents of EUR 78 million
DKR's real estate portfolio recognised on 31 March 2023 comprises 184 retail properties with a balance sheet value of around EUR 1,109.5 million (30 September 2022: EUR 1,050.7 million) and a rental area of around 1,085,000 square metres. As of the balance sheet date, the annualised rent amounts to EUR 78.0 million (30 September 2022: EUR 73.2 million).

The average acquisition yield of the total portfolio is currently around 10.0%.

At the beginning of the first half of the 2022/2023 financial year, DKR acquired a discounter in Suhl (Thuringia) with an initial yield of around 10%. Since then, no further acquisitions have been made, as DKR believes that the purchase price levels have not yet sufficiently priced in the current interest rate environment.

On the other hand, a DIY store in Chemnitz was sold for around 17.5 times the annual rent (or 5.7% initial yield), and two vacant properties in Bavaria (Scheyern and Salzweg) were sold for around EUR 2.3 million to streamline the portfolio. DKR is currently examining further specific purchase offers for some properties that would create value.

On the acquisition side, the Company expects an increasing alignment of the price balance with the current interest rate environment and a revival of transaction activity in the real estate market in the second half of the calendar year, which will result in interesting growth opportunities for DKR.
 

Refinancing of existing debt instruments carried out / Scope rating confirmed
In the second quarter of the financial year, a loan of EUR 35 million that was due to expire in the short term was repaid and largely refinanced with other banks.

In total, four loans with a total volume of approximately EUR 49 million were taken out in the first half of the financial year with durations between two and five years and an average interest rate of 4.57 %. The Company is also working on the prolongation and refinancing of the other loans expiring in the current calendar year as well as on the debt instruments expiring in the following year.

The rating agency Scope confirmed DKR's existing rating on 27 March 2023. Accordingly, the issuer rating remains "BB+/Stable" and for the financial instruments it remains at "BBB" (senior secured bond) as well as "BBB-" (senior unsecured debt). The rating report is published on the DKR website.
 

EPRA NTA per share rises to EUR 11.27 / Net LTV amounts to 51.6%
The EPRA NTA per share increased to EUR 11.27 as at 31 March 2023 (30 September 2022: EUR 10.98 per share) due to the positive half-year result.

The net LTV amounts to 51.6 % as of the balance sheet date and is thus slightly above the target figure of around 50 %.
 

FFO forecast for the financial year reduced by around 10%
In a statement dated 4 May 2023, the Management Board reduced the FFO target for the current financial year 2022/2023 by around 10% due to the unexpectedly few acquisitions and the increased interest expense and now expects FFO of between EUR 36 million and EUR 39 million (previously EUR 40 million to EUR 44 million).
 

Webcast and Conference Call
Deutsche Konsum REIT-AG will hold an analyst conference (webcast and conference call) on the results of the first half of 2022/2023 financial year today, 12 May 2023, at 10:00 a.m. CEST/SAST. The corresponding results presentation as well as further information on the webcast and the conference call can be found at https://www.deutsche-konsum.de/en/investor-relations. The half-yearly financial report of 2022/2023 financial year is available for download at https://www.deutsche-konsum.de/en/investor-relations/financial-reports.
 

About Deutsche Konsum
Deutsche Konsum REIT-AG, Broderstorf, is a listed real estate company focusing on German retail properties for everyday goods in established micro-locations. The focus of the Company's activities is on the acquisition, management and development of local retail properties with the aim of achieving a steady increase in value and the lifting of hidden reserves.

The shares of the Company are listed on the Prime Standard of Deutsche Börse (ISIN: DE000A14KRD3) and on the JSE (JSE Limited) (South Africa) by way of a secondary listing.

Contact
Deutsche Konsum REIT-AG
Stefanie Frey
Investor Relations
E-Mail: sf@deutsche-konsum.de
Phone: +49 (0) 331 74 00 76 – 533